Semi-liquid funds are set to be the new frontier for Neuberger Berman as it launches a new private equity evergreen fund.

The launch for European investors next year will complement its range of European long-term investment funds (Eltifs), the second of which closed raising €210m last week.

In total, Neuberger Berman has raised more than $1bn from intermediary clients across its Eltifs and select opportunities.

The firm will also be launching a third Eltif next year, Citywire understands.

‘A healthy percentage of our clients believe that these products will continue to play a larger role in captive discretionary assets run by institutions on behalf of their clients where they can better control the volatility of their net asset values,’ said José Cosio, global ex-US head of intermediary.

‘In a perfect world, I imagine there will be an income solution in [the semi-liquid space] as well. My view, optimistically speaking, is that I see us at the beginning stages of a multi-product, semi-liquid universe that allows us to tackle various initiatives and objectives for clients in a commingled evergreen product.’

Neuberger Berman already has a similar product in the US. The NB Crossroads Private Markets Access fund, which has a net asset value of $391m, can be accessed with a minimum investment of $50,000 by accredited investors and provides limited quarterly liquidity opportunities.

After infrastructure, real estate and private debt, Cosio believes the spread of private equity semi-liquid funds will allow banks and wealth managers to create semi-liquid portfolios across asset classes that become core to a client’s allocation, rather than being just a niche bet.

How did NB get here?

The group has been investing in private markets for nearly 30 years but in the last decade, its private markets division has grown assets fivefold to about $105bn.

The division runs strategies investing in primaries, secondaries and co-investments across private equity and private credit, on a fully discretionary basis.

Each year, these strategies deploy more than $10bn in capital, while also raising money at an equal or higher pace, managing director José Luis González Pastor told Citywire.

This year has seen deal flow at an all-time high, with the teams reviewing 500 deals in secondaries and 450 co-investments. Of course, only around 10% of these get done.

The firm employs 280 people in its private markets division, with nearly 100 of those looking at investments. Now the group is also building up a team on the infrastructure side replicating the three areas of expertise: primaries, secondaries and co-investments.

But the institutional private markets business and the retail one are two different beasts. And adding one on top of the other can be challenging.

For Neuberger Berman, an advantage has been its existing traditional asset management business and having a third of the group’s assets sitting in alternatives.

‘That’s something that’s built into the DNA of the firm – it’s not something that was bolted on. It’s run from the very top by people who understand these dynamics, and partners who do long-only or private markets collaborate to make sure there is a relative balance,’ said Cosio.

He added that if the group were starting from scratch now, it would be very difficult, especially in terms of creating a cultural fit and having an infrastructure that can sustain both sides of the business.

But with an established alternative investment fund manager in Europe, an experienced compliance team and two Eltifs already under its belt, the firm can have a new fund ready to go, with approval from regulators, within a few months.

‘Nobody feels neglected internally,’ Cosio said. ‘Although we’re eager to provide our best solutions to clients in the most functional way possible, and be a purposeful partner, we’re not obsessed as an organisation as to what percentage of time or assets is going into which one of the buckets.

‘We know they’re all equally important. We don’t pick a favourite child; we let the clients in the market dictate where our focus lies.’

When the firm launched its ’40 Act evergreen vehicle in the US, the private assets team reached out to the legal team that typically works on the public markets side to help guide them.

There was a similar collaboration when the firm launched its first Eltif in Europe in 2021.

‘Everybody is held accountable to the same standard. It doesn’t matter which division you’re in, you’re part of a process and everyone works to deliver the outcome. The private equity division doesn’t have to have its own product development, marketing or CPM structure. We blend them so there is the maximum amount of collaboration and accountability,’ Cosio said.

That’s what allowed the firm to launch more local products in multiple jurisdictions.

‘We listen to the clients. We detected, within the intermediary channel, that in Spain, there was an opportunity to raise assets, but you needed to use local infrastructure and a fund vehicle because of tax advantages,’ González Pastor said.

‘So, through our local office, we identified a number of partners and chose one. We brought our international institutional capability into a Spanish vehicle, that’s only been distributed in Spain. We have repeated that in France.’